In his high-poverty swath of the San Luis Valley, Center Consolidated School District Superintendent George Welsh has plugged numbers into the state funding formula and been dismayed at the result.

Even after accounting for such factors as at-risk kids, English-language learners and special education that drive additional dollars into poorer schools, Welsh sees the formula's cost-of-living allowance pump even more money per pupil into affluent districts with far fewer academic challenges.

"Unfortunately, it stacks up to be a haves-vs.-have-nots situation," he said. "Both are held to the same accreditation standard. But one has fewer resources to tap into at the base funding level."

Bottom-line issues such as those have sparked a potential revamp of Colorado's School Finance Act, which during this legislative session could face its first significant revisions in nearly 20 years.

The effort, fueled by a partnership of stakeholders convened by the Colorado Children's Campaign over 18 months, has evolved into a complex contraption whose moving parts span policy, politics and pending judicial decisions.

State Sen. Mike Johnston, D-Denver, emerged from that group — which ranged from reform advocates to establishment figures to business interests — as the political point man who will try to transform its ideas into law. Whatever formula he advances in a bill would go into effect only if voters support an initiative for a tax increase — some have floated a $1 billion price tag, although an exact figure remains uncertain.

Sixth-grade science teacher Monica Wisniewski works with Pija Williams Terralee, left, and Myth Cubbison at Kearney Middle School in Commerce City. Kearney is in Adams County School District 14. (Craig F. Walker, The Denver Post)

"What we've been trying to figure out," Johnston said, "is what it would take to build a 21st-century education system that has both adequacy and equity as the driving force. What we've found is that the formula now seems to be quite out of whack with actual needs."

Some of the key elements expected to appear in his draft legislation:

• More "student-centered" weights would be added to the funding formula — expanding weight for at-risk students and English-language learners and eliminating the cost-of-living weight — while basing the calculation on a broader student-count system that doesn't rely on measuring attendance on a single day.

• A need-based formula would determine the state's share of funding in a district by taking into account the district's assessed property value and the median income of its residents.

• Separate, enhanced special-education funding would be added so districts don't have to borrow from other programs to satisfy federal mandates.

• Early-childhood education for at-risk 3- and 4-year-olds and full-day kindergarten for all students would be funded, as well as an "innovation fund" to cover such extras as expanding school hours and days beyond what base funding allows.

"What you really want to do," Johnston said, "is make a far larger investment in the variables that are having the biggest impact on performance."

The bill, which Johnston hopes to introduce in early February and see passed in the Democrat-controlled legislature by mid-March, would feature a revised financial formula triggered only by a successful ballot initiative possibly as soon as November.

Supporters contend that an overall infusion of money could avoid fracturing support for changes in the formula because it would lessen the perception of financial winners and losers among the state's 178 districts.

Tom Massey, a former Republican legislator from Poncha Springs who chaired the House education committee through the last session, has reviewed some parameters of Johnston's bill and found them "significant and viable. The devil's going to be in the details."

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One area of concern revolves around possible financial incentives for districts that pass mill-levy overrides or bond issues, when some rural communities he represented "couldn't pass a mill levy or bond issue to save their lives."

"Even though the intent is to incentivize districts to do an in-kind piece, that's not always possible," Massey said. "How do you keep from making the chasm wider for these have-not districts? I know they should be vested in their own performance, so to speak. But that could become very problematic in some of our less affluent or extremely conservative districts."

But Massey, who also participated in the school-finance partnership and now works with the Colorado Department of Health Care Policy and Financing, said he's eager to sit down with Johnston and learn where there's room in the proposal for flexibility.

He has been in talks with his party's caucus and added that there could be Republican co-sponsors of a Johnston bill. But he added that any initiative seeking a tax increase will have to rely on a "succinct statewide marketing campaign" that fully explains the anticipated outcomes and costs.

Johnston has no illusions that a tax hike that voters might find palatable would come anywhere close to adequately funding K-12 education that already has seen roughly $1 billion stripped away in the past few years.

But he hopes to level the playing field on state per-pupil funding by determining a district's ability to generate local revenue before backfilling with state money.

Pat Sanchez, superintendent of Adams County School District 14 in the north metro area, grew up in the town of San Luis and can empathize with the challenges faced by George Welsh in Center — because he sees parallels in his own district, where 23 percent of his students live below the poverty line and, not coincidentally, student performance ranks near the bottom statewide.

"Generally speaking, our students are at a different point in the starting line for the race, two or three years behind grade level in core areas," said Sanchez. "They do need to get better, but it takes time on task and practice to get better. The (funding) formula needs to be more equitable."

Any school-funding formula inevitably bumps into constitutional conflicts among the Taxpayer's Bill of Rights, or TABOR, the Gallagher Amendment and Amendment 23.

"It is so fundamentally unfair to think that in Aspen you tax yourself at a rate that's easily 30 to 40 times less than if you live in the San Luis Valley," said Tony Lewis, executive director of the reform-minded Donnell-Kay Foundation and an originator of the school-finance partnership. "The poorer you are, the higher percentage of your money has to go in taxes for schools? It's totally crazy. But it's an artifact of TABOR and Gallagher."

Essentially, TABOR prohibits any tax increase without a popular vote, while Gallagher effectively has reduced property-tax revenues that fund schools. The combination of the two led to a major shift in the source of school funding from predominantly local to predominantly state — a trend proponents of the revamped plan would like to reverse.

Amendment 23 basically called for school funding to keep pace with the rate of inflation, although during the recent economic downturn, the legislature employed a different — and, some say, questionable — set of accounting measures to cut the education budget.

Gov. John Hickenlooper's reference to the constitutional issues in his recent State of the State speech underscored the idea that any efforts to rewrite the School Finance Act must take into consideration untangling this "fiscal knot."

Looming in the background of the discussion is the so-called Lobato lawsuit, in which plaintiffs contended that Colorado doesn't adequately fund public education. While lower courts have held in favor of plaintiffs, who include students from Center and Adams 14 districts, the state has appealed to the Colorado Supreme Court.

That outcome remains a wild card that could wield huge impact on how Colorado funds its schools. Oral arguments are scheduled for March 7.

In the Lobato case, an education consulting firm estimated the annual funding deficit at around $4 billion — a figure that dwarfs numbers tossed around with respect to a tax-increase initiative.

Johnston said he's focused on the policy side of the equation and will leave it to others to determine exactly how much more money to seek from taxpayers.

"There are tactical decisions to be made," he said. "You can go from the Pinto model to the Cadillac model. We need a number that we think the taxpayers of Colorado think is fair and they will support, and that probably won't be what we think the perfect system is."

Sen. Rollie Heath, D-Boulder, went to voters in 2011 with the ill-fated Proposition 103, an effort to raise money for education through sales and income taxes. The idea was crushed at the polls.

But the landscape would be different for this initiative, he contends.

"We've built the accountability blocks, we've done what we need to do to make funding more equitable across the state and now we need the funding to make sure kids get the best competitive chance we can give them," Heath said. "That's how we've got to present this."

Chris Watney, president and chief executive of the Colorado Children's Campaign, convened the consortium that advanced consensus policy recommendations. Soon, she'll find out if the coalition can hold as those ideas get processed through the legislative meat grinder.

"I realize we're entering into a whole other phase where politics is so important and trust is hardly a word that's bantered about at the Capitol regularly," she said. "But I feel really hopeful that what we've seen leading up to the session, which is a unique place of trust and collaboration, can keep going."